With mortgage rates near 20-year highs and relatively few homes listed for sale, the Atlanta-areahousing market in August reached something of a precarious — and possibly temporary — plateau with prices rising, but slowly.
The median price of a home sold last month was $404,000, according to data released this week by the Georgia Multiple Listing Service.
That was just 1% higher than in July and only 2.3% above the median price of a home sold a year earlier, compared to double-digit increases for previous years, said John Ryan, chief marketing officer of the Georgia MLS.
The dampener on price hikes has been mortgage rates, pushed higher by the Federal Reserve’s campaign to tame inflation by raising borrowing costs.
When that changes, the market will see a flood of buying, predicted broker Kristen Jones, owner of Re/Max Around Atlanta. “Eventually, the Fed will stop, and mortgage rates will come down. At that point, we expect the floodgates to open.”
But right now, those gates are high and they’re holding.
The average rate for a 30-year mortgage was 7.18% at the end of August, the highest it has been since March 2002, according to the Federal Home Loan Mortgage Corp., which insures loans in secondary markets.
Many who do buy now are betting that can’t continue, Jones said. “Buyers crossing their fingers that they can refinance in the next few years.”
Higher rates not only make monthly payments dramatically higher for new buyers, they freeze many potential sellers who don’t want to trade their current low rates for a high rate if they move, Jones said. “Sellers are not motivated to list. About 61% of all outstanding mortgages have an interest rate below 4%.”
With so many potential sellers standing pat, inventory — that is, the number of homes listed for sale — was 12.1% lower in August than it was a year earlier, according to the Georgia MLS.
Fewer than 11,000 homes in the region were listed for sale, which represents barely two months of sales. In a healthy, balanced market, the inventory level should represent at least six months of sales.
Part of the problem is an overall housing shortage in metro Atlanta.
After years of exuberant overbuilding, construction came to a virtual halt during the 2007-09 recession and has never regained its previous pace despite the region’s population growth. Since 2012, the shortage — and the flow of millennials into the market — has kept home prices rising, which increasingly made affordability an issue.
Then came the pandemic, which roiled expectations about commuting and home offices, and spurred federal efforts to protect household finances by driving interest rates down to historic lows and pumping money into the economy.
The rebound from the pandemic has meant rapid job growth, along with higher pay for many.
But at least until recently, Atlanta home price gains far outpaced income growth. That made down-payments for homes a challenge, shoving many potential buyers out of the market.
Demand for housing has spurred construction, most of it well outside the city of Atlanta. Even so, high land prices and various zoning restrictions have made construction for first-time buyers rare.
In Alpharetta, Blue River Lifestyle Communities this week announced a 24-unit development that includes both townhomes and single-family houses. The homes will be listed at $1.3 million or more.
Nearly 80% of baby boomers own a home, but only about half of the nation’s millennials do, according to national brokerage Redfin. About 1 of every 5 millennials say they don’t think they’ll ever be able to afford one, according to a Redfin poll.
But at least renters have also seen a moderation in the market. Metro Atlanta’s median rent is $2,127 a month, according to Rent.com, which tracks rentals nationally. That is virtually unchanged from a year ago, the group said.
And rate hikes are also biting homeowners who stay put.
The Fed’s campaign ripples through to virtually all borrowing, from car loans to credit cards. So even homeowners with low-rate mortgages will pay more than before if they want to tap their mortgage for a loan, said Andy Walden, vice president of research at Black Knight, a real estate analysis firm recently purchased by Atlanta-based Intercontinental Exchange.
Nationally, mortgage holders withdrew $39 billion in equity from their homes in the second quarter of this year, which is only about half as much as before interest rates started to climb, he said. “Rising rates are having a clear impact on how — and how much — equity mortgage holders are willing to withdraw from their homes.”
Metro Atlanta housing market, August
Median sales price: $404,000
Number of sales: 5,299
Number of homes listed for sale: 10,927
Price compared to year earlier: up 2.3%
Sales compared to year earlier: down 15.8%
Price compared to January 2020: up 50%
Average rate, 30-year, fixed-rate mortgage
Aug. 31, 2023: 7.18%
Aug. 31, 2022: 5.66%
Aug. 31, 2021: 2.87%
Aug. 31, 2020: 2.91%
High since 1999: 8.64% (May 2000)
Last time above 7%: March 29, 2002
Source: Georgia Multiple Listing Service, S&P Case Shiller Index, Federal Home Loan Mortgage Corp.
With the typical cost of a home in Los Angeles soon topping $1 million, and the state’s median rent approaching $3,000, there’s a sense of doom around how unaffordable California has become. We clearly need more housing density to meet the current needs. But we don’t have to sacrifice the lifestyle to which Californians have grown accustomed.
Los Angeles is geographically vast — nearly twice the size of Chicago and significantly larger than New York City, with much lower population density than those two cities. Jobs are nearly as dispersed here as homes, and none of our transportation options work that well: We are too sparse for trains and we have under-prioritized bus service, which most Angelenos don’t use because it’s rarely the fastest option. L.A. is built around cars, yet it’s also now too dense for vehicle traffic to move efficiently.
But this kind of sprawl can be put to good use. In contrast to Chicago and New York, whose commercial centers dwarf job prospects elsewhere in each city, Greater Los Angeles has numerous clusters of job-rich areas. The Westside and Irvine rival downtown L.A., and employment centers in Glendale, the West Valley, Long Beach, Anaheim and the Inland Empire each contains roughly half as many jobs as there are downtown.
We can reframe our planning for housing around these medium-density urban hubs, which are scattered throughout the region. This approach has been a successful and flexible model, especially outside the U.S. Consider the densely populated suburbs of Tokyo, which offer varied housing types and transportation options, or the suburbs of many major European cities built around lower density townhomes, row houses or smaller apartment buildings and duplexes. Often those developments are close to a commuter rail station that can take residents into the central city in less than 45 minutes.
Maximizing our multiple job centers requires that we shift course from our single-family-dominated residential landscape to hit a sweet spot that works for Californians: more density, but not so dense that Angelenos will have to sacrifice the space we’re used to. We should focus on increasing smaller multifamily housing (i.e. two to eight units) while still making it possible for people to live close enough to employment centers.
To do this, we have to reform our land use — including laws that discourage building for density — to provide alternatives to sprawling single-family neighborhoods. This does not necessarily mean obliterating the urban forms and communities that have been built in the past century. But without some densification, we’ll keep pushing people and development into the Inland Empire and other outlying areas (which is already happening). The result is predictable: more punishing commutes and, in all likelihood, still expensive housing.
I live in a single-family home on L.A.’s Westside, and I see firsthand how laws that favor my type of home hold the neighborhood back. Although I live next door to multifamily housing, those apartments and townhomes are the exception in my neighborhood. Restrictions on building anything but a single-family home or an accessory dwelling unit stretch a mile from my house to the nearest stop on the Metro E (formerly known as Expo) Line. Restrictions on building apartments apply to most land plots in a one-mile radius around that Metro stop.
These zoning limitations make no sense: They mean too few people can live close enough to generate the ridership necessary to justify the immense investment it took to build the E Line. Further, the neighborhood’s single-family housing is so astronomically expensive — a million dollars will get you … nothing — that the people most likely to rely on the E Line cannot afford to live there. There are several reasons why ridership is down on L.A. Metro’s trains and buses, and too little density near transit is a major reason.
Remote work has also opened up new possibilities for housing in Southern California. A key factor that continues to drive up real estate in central cities is the increased tendency for higher-income households to live closer to highly urbanized areas. Remote work can help ease these rent pressures by making some central neighborhoods less appealing for higher-income office workers who no longer have to go into a downtown office.
Neighborhoods such as Echo Park and Boyle Heights might see some relief from constantly rising rents and displacement pressures. More strategic planning around transit-rich neighborhoods would further relax rent increases in these neighborhoods. If we can allow for greater density in more neighborhoods, particularly in zones close to dispersed job centers such as Santa Monica, Pasadena and Burbank, then the areas most at risk of gentrification should see some relief.
This approach would also allow greater flexibility in the type of development needed to meet state housing mandates. Under state guidelines, Southern California has to add 1.3 million housing units by 2029. If we have, by a conservative estimate, at least 12 major job centers, each hub should be zoned to serve 100,000 units of housing within commuting distance to reach the 2029 goal.
With remote work and less than daily commutes, the potential commuting distance many workers are willing to accept will be greater. In turn, this significantly expands the land area where we can build units to serve an employment hub, providing workers with many more potential housing possibilities. But only if we allow them to be built.
Los Angeles has a unique urban landscape. Because of our many dispersed employment-rich centers and broad geography, we don’t have to mimic East Coast cities to increase housing density. We don’t need to build condo towers or skyscraper apartment buildings to house everyone. The path to a more livable and equitable future is clear: Allow more housing in a diversity of well-connected neighborhoods, and L.A. can still remain L.A.
Michael Lens is a professor of urban planning and public policy, and associate faculty director of the Lewis Center for Regional Policy Studies at UCLA.
Home-value growth is slowing in almost two-thirds of the nation’s largest housing markets, according to the July Zillow Real Estate Market Report. Seattle, Tampa, Sacramento, Calif., and Portland reported the greatest slowdown in home value appreciation over the past year.
Seattle, which led the nation in home-value growth a year ago, is now the 12th fastest-appreciating housing market and reported the greatest slowdown over the past year. At this time last year, home values in Seattle were appreciating at more than 14 percent annually, but have now slowed to a 9 percent appreciation rate.
Home values across the U.S. rose 8 percent in the past year, 0.7 percentage points faster than the year before. While national home value growth hasn’t slowed yet, Zillow forecasts the annual appreciation rate to drop to 6.8 percent over the next 12 months. The median home value in the U.S. is $218,000, the highest value ever reported.
While home-value growth is slowing in the majority of the largest markets, the current annual appreciation rate is still higher than historical norms in all but four of the markets analyzed. In Tampa, where home-value growth has slowed significantly over the past year, home values rose over 10.5 percent in the past year, while the historic average rate of appreciation is just over 5 percent. The historic average annual rate of appreciation in the U.S. is 3.7 percent.
“The nation’s pricier markets are starting to feel an affordability squeeze as buyers begin to balk at the sustained, rapid rise in prices that have followed the strong job growth and high housing demand of the past half-decade,” said Zillow senior economist Aaron Terrazas. “But despite the slowdown, home values are still growing faster than their historic pace in almost all large markets, and it’s far too soon to call it a buyer’s market. And in many of the nation’s more affordable areas, aside from the pricey and exclusive San Francisco Bay Area, home value growth has perked up as buyers continue to seek good value for their money. But it’s clear that the winds that have boosted sellers over the past few years are ever-so-slightly starting to shift.”
The rental market is also showing signs of a slowdown. Median rent across the U.S. rose 0.5 percent over the past year to $1,440, down from 1.6 percent growth a year ago. Among the 35 largest housing markets, 21 reported slower rent appreciation in July compared to a year ago, with Seattle, Portland and Kansas City leading the slowdown.
Rental prices rose the most over the past year in Riverside, Calif., Sacramento and Las Vegas. Median rent in Riverside rose 4.6 percent since last July to $1,898. Median rent in Sacramento and Las Vegas rose 4.4 percent and 3.2 percent, respectively.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
Known for its thriving economy, diverse cultural tapestry and a harmonic symphony of natural beauty and industrial prowess, Seattle has become an urban lodestar, attracting individuals from all corners of the globe. The burning question that resides within the minds of these prospective newcomers is, of course, how far does an average salary in Seattle take you?
Take a hearty annual salary of $100,000 as an example, which stands just below the average median household income in the city and roughly twice the average per capita salary. Seattle has much to offer for those with this level of income, which fits snugly within many earners’ income brackets in the Emerald City. When negotiating Seattle’s ebbs and flows, it’s key to understand the particular tug of these Pacific Northwest cost-of-living currents.
A substantial chunk of most salaries should be allocated to housing. The median rent for an apartment in Seattle hovers around $2,876 per month. This may cause an involuntary gulp from those accustomed to the rental markets elsewhere, yet for this radiant cityscape, this price awards you the key to a well-situated, comfortable abode within the bustling heart of the Pacific Northwest.
Now, once settled in your apartment, let’s discuss the next major category: transportation. Seattle is a city designed for both vehicular and non-vehicular movement. Owning a car could set you back approximately $9,282 annually when considering payments, insurance, gas and maintenance. On the other hand, with an ORCA card in your wallet — Seattle’s public transportation ticket to freedom — you’re looking at a manageable annual total of about $1,188.
Diving into the culinary landscape of Seattle — a delightful medley of global and local cuisine — the average person spends about $3,000 annually on groceries. Add another $3,600 or so for dining out, and you’re fully equipped to relish in the gastronomical symphony of Seattle, from Pike Place Market to the blossoming food truck scene.
Entertainment, the sweet release from work’s daily grind, is a category with more personal variance. Seattle offers a spectrum of experiences, from the splendor of the Symphony at Benaroya Hall to the electric atmosphere at a Seahawks game. On average, an individual might expend around $2,500 annually on such delights, a reasonable sum to access Seattle’s pulsating heartbeat of culture and excitement.
Beyond these primary categories, there are the inevitable and unavoidable expenses —healthcare, personal care, taxes — that are often underestimated but are part and parcel of urban life. Including these necessary expenditures, you’ll find that a $100,000 salary provides a comfortable, engaging and invigorating existence in Seattle.
Seattle job market at a glance
To begin, let’s talk about the behemoths, the ones whose shoulders bear the economic load of Seattle. Of course, it’s impossible to discuss the corporate landscape of the city without mentioning Amazon. Love it or hate it, Amazon isn’t simply the biggest employer in Seattle; it’s an entity that leaves its fingerprints on the city’s economic and architectural blueprint.
Similarly, there is Microsoft. While it resides in nearby Redmond, the reach of this colossal technological titan extends well into Seattle. The company’s high-tech operations and legions of software engineers contribute significantly to the city’s stellar economy, thereby cementing its status as a solid coastal city for tech titans.
Next, we cannot overlook the mammoth of aerospace, Boeing. Although its headquarters moved to Chicago, its largest division remains in the Seattle area, employing a massive number of people in the fields of aviation and engineering.
Speaking of scientific and engineering marvels, Seattle is a national nerve center for biotechnology and healthcare, with companies like the Fred Hutchinson Cancer Research Center and Seattle Genetics leading the charge. Swedish Hospital and the University of Washington Medical Center, both of which are top-tier healthcare facilities, add to this healthcare tableau with their thousands of employees.
As we delve deeper, we find that Seattle’s economy has a firm foundation in retail as well. We see the presence of companies like Starbucks, whose green mermaid symbol appears on almost every city corner, and Nordstrom, the upscale fashion retailer, both headquartered in the city.
The final, crucial piece of Seattle’s vibrant economic puzzle is the Port of Seattle, which includes the maritime industry and Sea-Tac Airport. With cargo and cruise services, the port is a significant player in the local economy, while the airport connects Seattle to the world.
Settle down in Seattle
The average salary in Seattle may initially seem daunting, especially when compared to more affordable locales. But it’s critical to remember that living in Seattle offers you a front-row seat to a progressive economy, a world-class culture and an unmatched natural landscape that melds mountains and sea into a breathtaking display of unparalleled beauty.
So, when considering the average income in Seattle and how far a $100,000 salary might stretch, it’s not just a question of numbers. It’s about the quality of life, the thriving culture and the sheer joy of immersing oneself in the one-of-a-kind environment that is Seattle. All things considered, a $100,000 salary goes a long way in offering a full life in this Emerald City.
If you can make it anywhere, can you make it here?
When looking into the bustling metropolis of New York City, it’s easy to be swept up in the kaleidoscope of city lights, towering skyscrapers and the ceaseless symphony of life that dances through its streets. However, amidst the hypnotic allure of the city that never sleeps, practical considerations emerge. Considerations like the economics of living in this urban paradise. A particular question looms large: “What is the average salary in New York, and how far does a $100,000 salary stretch?”
The average salary in New York is a topic of interest for both locals and those considering a move to this vibrant city. While the average salary in NYC currently hovers just above $50,000, for many, $100,000 seems to be a gold standard, a signpost that one has ‘made it.’ However, the reality of living in New York with this salary can prove more challenging than you might think in a metro that has this much to offer.
In terms of housing, the median rent in New York as of July 2023 is $4,364, translating to over $52,000 annually. That’s more than half of a $100,000 salary spent on accommodation alone. Yet, New York’s diverse range of neighborhoods offers options for different lifestyles and budgets. While Manhattan may command sky-high prices, boroughs like Queens or the Bronx may offer more affordable rents without compromising the quintessential New York experience.
Transportation, another major consideration, can be relatively affordable. Opting for public transport, the subway costs $2.75 per ride, with a monthly MetroCard costing $127. This equates to a yearly expense of $1,524 if one is commuting daily — a mere fraction of the $100,000 salary. Of course, for those desiring the convenience of a car, parking fees, insurance and fuel costs can add a significant amount to this figure.
Food and entertainment are areas where New York truly shines. The city’s multicultural tapestry has created a food scene like no other. Eating out in New York can be an adventure, with price points to suit every pocket. For a foodie earning an average salary in New York, a mix of dining out and cooking at home can balance the budget nicely. Let’s say you spend about $400 per month on groceries and $200 on dining: That’s a total of $7,200 annually.
The city’s entertainment scene is equally diverse. A night out at a Broadway show, a visit to one of the city’s many world-class museums or a concert in Central Park could set you back, but it’s part of the allure that makes New York, New York. An allocation of $500 per month towards entertainment, while on the generous side, equals $6,000 per year.
Add in additional expenses like utilities, health insurance and personal care, and you’re looking at another $10,000-$15,000 annually, depending on individual needs and choices. All these expenses combined, a $100,000 salary in New York can offer a comfortable lifestyle, though without much room for extravagant splurges.
New York job market at a glance
New York’s economic tapestry is just as dynamic as the city itself. The city is a magnet for talent, driven by a wide range of industries that form its thriving economic ecosystem. While it’s nearly impossible to encapsulate every facet of this ever-evolving landscape, a few industries and employers emerge as the city’s backbone.
New York’s Wall Street is globally synonymous with finance. It is the heart of the world’s financial markets, housing the New York Stock Exchange and NASDAQ, two of the largest stock exchanges worldwide. Major employers in this sector include Goldman Sachs, JPMorgan Chase and Morgan Stanley. Not only does the industry provide direct employment, but it also fuels ancillary services like law, consulting and real estate.
Healthcare is a top employer in New York, contributing significantly to the city’s employment landscape. The city boasts world-class hospitals and research institutions, including NewYork-Presbyterian Hospital, Mount Sinai Health System and Northwell Health. These organizations offer a wide range of roles, from clinicians to administrative staff, reflecting the sector’s diversity.
New York’s tech scene has experienced explosive growth over the past decade, earning the moniker ‘Silicon Alley.’ The city is home to tech giants like Google and Amazon, who’ve set up major outposts here. Additionally, it hosts a solid startup ecosystem, featuring companies like Etsy, MongoDB and Datadog, just to name a few.
Media and entertainment
New York’s media industry is renowned worldwide, with numerous media conglomerates calling the city home. These include Time Warner, ViacomCBS and The New York Times. The city’s thriving entertainment sector hosts Broadway, a global beacon for theatre and major television networks like NBC and ABC.
Retail and fashion
New York is a global fashion capital, playing host to renowned fashion houses and designers. Do Vera Wang, Michael Kors and Donna Karan sound familiar? It’s also home to retail giants like Macy’s and Bloomingdale’s. The fashion week in New York further bolsters the city’s reputation as a leader in fashion and retail.
Tourism and hospitality
New York’s iconic landmarks, from Times Square to Central Park, attract millions of tourists each year. This fuels a vibrant tourism and hospitality industry, with major employers including hotel chains like Marriott and Hilton, as well as tons of restaurants and service providers.
With prestigious institutions like Columbia University and New York University, education is a major employer in New York. These institutions offer employment opportunities in teaching, research, administration and support roles.
Find a new apartment in New York
Given these numbers, it becomes clear that while a $100,000 salary is substantial, it’s also relative. What it offers depends on a variety of factors — lifestyle choices, neighborhood, family size and more. Overall, a prudent financial approach can help navigate the complexity and allow one to savor the flavors of the Big Apple without biting off more than they can chew.
Welcome to Los Angeles, a microcosm of America’s appeal and a dazzling spectacle of capitalism in action.
This is a city that draws in renters in droves with the shimmering promise of sun, surf and Hollywood stardom. With so many people moving to the bright lights en masse, it’s important that we take a few minutes to delve into the reality of living in Los Angeles on $100,000 — which surpasses its average salary of around $72,000 — and examine just how far that income stretches in this sprawling city of dreamers and doers like you.
Renting an apartment in Los Angeles may be your first rendezvous with the city’s higher-than-average cost of living. With a median rent of $3,636, you’ll barely have any time to unpack before about one-third of of your paycheck is already claimed. But hey, you console yourself with the sun setting over the Pacific and the faint echo of surf in the distance. You’re still living the LA dream, after all.
Next, you enter the infamous LA traffic. Public transport here feels like an afterthought, so owning a car is a necessity. Between monthly payments, insurance, maintenance and gasoline for those endless freeway odysseys, you’re looking at another $9,000 per year dedicated to transportation.
Once you’ve sheltered yourself and got wheels beneath you, it’s time to eat. LA is a gastronomic wonderland, offering up everything from delectable street tacos to gourmet vegan donuts, all at a price. If you’re a social animal who enjoys eating out, allocate at least $4,000 to $6,000 per year. If you’re a homebody, you’ll still shell out a good $4,000 annually for groceries. The city’s culinary delights may be lip-smacking, but they’re not exactly pocket-friendly. It all depends on who you know and where you go.
And then there’s the glitzy allure of LA’s entertainment scene. Lakers games, red-carpet premieres and concerts at the Greek Theatre—all part of the city’s hypnotic charm. However, such experiences can quickly rack up a bill running into thousands. Remember, the bright lights of LA don’t shine on a budget.
Adding it all up, our initial $100,000 is rapidly consumed, leaving a slim slice for savings, emergencies or that hopeful vacation fund. The average salary in Los Angeles, when viewed through the lens of living costs, begins to feel more or less average.
The LA job market
From the surly valet with dreams of a big break to the barista who’s secretly working on her third screenplay, LA is the beating heart of the film, television and music world. It’s where dreams are made and hearts are broken. From Paramount Pictures to Universal Studios to Warner Bros. Entertainment, these giants not only dominate the Los Angeles skyline but also its job market.
But LA is more than just glitz, glamour and the occasional paparazzo run-in. One of the city’s largest employers is decidedly less glitzy but equally influential: The University of Southern California. With its legion of educators, administrative staff and an array of other roles, it’s a keystone in LA’s economic landscape.
Then there’s the healthcare industry. In Los Angeles, Kaiser Permanente, UCLA Health and Cedars-Sinai Medical Center are not just venues for your latest health drama, they’re significant employers, too.
Let’s not forget the service industry, either. Tourism is one of LA’s strongest economic strongholds. The city of angels, beach bods and Hollywood stars attracts millions of wide-eyed visitors yearly, ensuring an always-thriving hospitality sector. Whether it’s a barkeeper in Santa Monica or the concierge at a luxury hotel downtown, these folks keep LA’s heart pumping and its pockets lined.
Finally, to those who think LA doesn’t have its fingers in the tech pie, think again. ‘Silicon Beach,’ they call it, with companies like Snapchat, Hulu and many more calling it home. From AI specialists to cybersecurity experts, the tech scene is as bubbling and effervescent as an ice-cold Pacifico on a sweltering afternoon on the beach.
Life in Los Angeles
For all its quirks, Los Angeles is a city that thrives on creativity and diversity. There are stunning beaches, vibrant farmers’ markets, eclectic neighborhood fairs and hiking trails with breathtaking views, many of which are free or relatively inexpensive.
Furthermore, it’s crucial to remember that life isn’t merely an exercise in budgeting. Living in LA offers an incalculable wealth of experiences. The city’s cultural mosaic provides everything you need to live a rich life, from art galleries and music festivals to diverse pop-up restaurants and film screenings. Not to mention the fact that the networking opportunities in a city so deeply connected with multiple thriving industries can also have untold benefits on your career path and personal growth.
Live it up in LA
Is the average salary in Los Angeles daunting when faced with the high cost of living? Absolutely. But the LA experience isn’t about trading dollars for goods. It’s about a lifestyle, a rhythm and an energy that you won’t find anywhere else.
So, if you’re asking if $100,000 is enough to live in Los Angeles, the answer is both yes and no. Yes, if you’re willing to balance your books, live within your means and savor the city’s many affordable experiences. No, if you’re aiming for a studio feature lifestyle on an indie film budget. But, with careful planning and a sense of adventure, even an average salary, or slightly below, can be enough to carve out a comfortable niche in the City of Angels. Ready to find your space in LA? Start here.
A native of the northern suburbs of Chicago, Carson made his way to the South to attend Wofford College where he received his BA in English. After working as a copywriter for a couple of boutique marketing agencies in South Carolina, he made the move to Atlanta and quickly joined the Rent. team as a content marketing coordinator. When he’s off the clock, you can find Carson reading in a park, hunting down a great cup of coffee or hanging out with his dogs.
Rents across the country continued to tick up in March—but at a much slower pace.
Tenants shelled out about 2.5% more last month compared with a year earlier in the 50 largest metropolitan areas, according to the most recent Realtor.com® rental report. Nationally, the median rent was $1,732 a month. While that figure was $15 higher than in February, rents were down $32 from the peak set in July 2022.
“Both rent prices and price growth have cooled, which means relief for renters,” says Realtor.com economist Jiayi Xu. Still, “it’s important to remember that price levels are very high.”
Indeed, with monthly rent costs roughly one-quarter higher than they were before the COVID-19 pandemic, even areas that were once considered affordable are starting to feel the pinch.
(Realtor.com looked at rents for studios; one-bedroom and two-bedroom apartments, condos, and townhomes; and single-family homes in the 50 largest metros. Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
The West may not be the best for budget-minded renters
The rental market is starting to revert back to a more pre-pandemic status quo. Tenants aren’t chasing warmer climates and more square footage with the same fervor that they were at the height of COVID-19.
Rental growth in Sun Belt markets was a mere 0.2% higher than a year ago and was down 4.7% year over year in places such as Phoenix. Western coastal markets like San Francisco and Los Angeles both saw 0.8% yearly declines.
Prices were down the most in the Riverside, CA, metro. They fell 5.3% in March from the same month a year earlier,
“COVID freed up a lot of people from their traditional commutes, and in the case of Southern California, this meant the ability to move away from Los Angeles,” says Vivian Zhou, a real estate agent with Flyhomes in Southern California. “Riverside offered the extra space, lower costs, and great weather everyone was looking for.”
But some folks have been forced to move back to larger cities to be closer to their offices, hurting these farther-out areas. As Xu points out, though, prices across the country are still lofty, and that’s helping nudge people into the parts of the country that are more affordable by comparison. As a result, prices in these cheaper areas are surging.
The Indianapolis metro, where the median asking rent was $1,277 in March, experienced the largest price jump. Rents leaped up 10.3% compared with a year ago. It was followed by Cincinnati, with a 9.6% increase, to a median of $1,196.
Despite the increases in many Midwest markets, tenants may pay less than half what they would in pricier coastal areas. The median monthly rental price in Silicon Valley’s San Jose, CA, was $3,304. In the New York City metro area, it was $2,994.
Smaller equals cheaper
During the pandemic, many renters eschewed smaller apartments. But today, these are the units going up in price the most.
In March, studios were 4.7% more expensive than a year ago, reaching $1,451 a month, while two-bedroom units were 2% pricier, at a median of $1,901 a month. Meanwhile, one-bedroom units cost about 3.5% more, at $1,637. Renters might continue to find more bargains among smaller apartments, as studios have gained 21.7% over the past four years, while the cost of two-bedrooms is up 27.2%.
While demand for sun, space, and other factors might have helped drive pandemic-era migration, extra supply might now become a key factor in pricing, helping to bring costs down for renters. Builders are turning out record numbers of newly constructed apartments, Xu points out, helping ease some of the demand.
Those new units are hitting the market just as the economy might take a turn for the worse, Zhou notes.
“Landlords and potential tenants are planning for what could be a rough 12 months ahead,” she says. “We’ve been hearing about the possibility of a recession, and that takes a toll on the psyche. Tenants are less likely to sign a more expensive lease, and landlords are offering incentives to ensure occupancy in the coming year.”
Households including at least one person with a high school diploma or GED can afford the typical mortgage payment in most large metro areas across the U.S., according to a new analysis by Zillow.
But soaring home values that have outpaced incomes have made down payments a barrier for many, particularly first-time home buyers.
Mortgage rates have dipped to multi-year lows in recent months, meaning monthly payments are relatively affordable for buyers who can secure a down payment. However, down payments are a challenge to afford for many as prices have grown faster than incomes over the past several years. An earlier Zillow study found that buyers need 1.5 years longer to save for a 20% down payment on the typical home than 30 years prior, and the difference is much more extreme in the most expensive metros – 13.3 years longer in San Jose, for example.
This effect is especially pronounced for first-time buyers who do not have the equity of an existing home to put towards a down payment on a new one. Zillow data shows that 46% of a typical down payment comes from savings for first-time buyers, compared with 35% for repeat buyersii.
“The influx of highly educated workers into already-expensive metros with stagnant or slow-growing inventory has made it difficult for those with less education and earning potential to enter those markets,” said Skylar Olsen, director of economic research at Zillow. “There can also be considerable variation within metros. While a bachelor’s degree may be enough to afford a mortgage on the typical home in the San Diego metro at large, it’s likely to be insufficient in pricey areas like La Jolla. And that’s only after scraping together a sizable down payment, which is a huge hurdle for most buyers.”
For households that secure a down payment, the median mortgage payments are affordable for those with a high school education in 36 of the 50 largest U.S. metros. The remaining 14 metros require earnings associated with at least a two-year associate’s degree.
The median income of a university degree holder is necessary to afford the median mortgage payment in the five most expensive West Coast metros. A bachelor’s degree is typically needed in San Diego and Seattle, while the typical income of someone with an advanced degree is required in San Jose, San Francisco and Los Angeles. The typical mortgage payment is affordable for those with associate’s degrees in Boston, New York, Sacramento, Washington, D.C., Denver, Portland, Riverside, Salt Lake City and Miami.
In only one metro, Oklahoma City, can those with less than a high school degree usually afford the typical mortgage payment. Households in Oklahoma City benefit from a combination of low housing costs – only three of the 50 largest metros have a lower median mortgage payment – and relatively high median incomes for households in which nobody has a high school diploma.
Median rent was 27.8% of the typical U.S. household income in Q1 2019. This is up slightly from the previous quarter and just below levels from a year earlier. Rent was most affordable for those in Pittsburgh, where the median rent is 21.4% of the typical household income. Los Angeles is the least affordable large metro for renters – 46.1% of the typical income is required to pay the median rent there.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
Apartment hunting in Southern California is notoriously difficult. In the last two years, the search turned particularly nightmarish.
In part for pandemic-related reasons, the number of units available to lease fell to historical lows. Rent soared.
Some apartments even had bidding wars — an unwelcome reality typically limited to the for-sale market.
But now, a little bit of sanity is returning.
If you’re looking for a new rental, don’t expect a deal, but you may find the search less maddening.
What exactly is happening?
Simply put, there are more apartments for people to move into. Across the region, vacancy rates are rising after falling to decades-long lows in 2022 and 2021.
In Los Angeles Countyearly last year, only 3.7% of apartments were vacant and available, the lowest level since 2001, according to real estate data firm CoStar. Now that measure is up to 4.4%.
It was even worse in both the Inland Empire and Orange County, where the vacancy level fell to about 2% in 2021. In Riverside and San Bernardino counties, that set a record in a data set that goes back to 1982; in Orange County it was essentially equal to a record set in 1984.
Vacancy has now doubled in both areas, up to 5.4% in the Inland Empire and 4.1% in Orange County.
In Ventura and San Diego counties, vacancy similarly fell below 3% in 2021 and is now 3.8% in San Diego and 5.4% in Ventura.
Rob Warnock, a researcher with the rental website Apartment List, said vacancy fell so low because many people moved out of shared living situations with family or roommates in 2021 and 2022. They wanted a place of their own and essentially created a wave of new households that gobbled up available rentals.
A rebounding economy, stimulus payments and a desire to no longer be cooped up with others like early in the pandemic probably helped drive the surge, Warnock said.
Now, the switch is flipped.
As consumers worry about inflation and the direction of the overall economy, they’re forming fewer households as new apartments continue to open up.
“Unemployment still looks good, but there is that uncertainty,” said Ryan Patap, an analyst with CoStar. “That makes people more cautious in spending up, committing to a new lease, moving out of their parents’ house — all of those dynamics.”
Richard Green, director of the USC Lusk Center for Real Estate, said another factor may be at play.
“The mystery [was] people are leaving California — how come vacancies weren’t rising?” he said. “Maybe it’s starting to show up.”
What does that mean for me?
To be clear, vacancies are still far lower here than many markets around the country, which economists attribute to the difficulty of building housing in California. But if you are out there searching for a place, you may have an easier time than this time last year.
Michael Lucarelli is chief executive of RentSpree, a Sherman Oaks-based company that provides application and rent collection services for 41,000 leasing agents, property management firms and individual landlords in California.
With the rise in vacancy, he said renters are less likely to have to make snap decisions on whether a place is right for them, and he hears less and less about bidding wars at his client’s properties.
“It’s creating a little bit more leverage on the side of the renter,” Lucarelli.
What about rent?
By most measures, rent is still rising, butnot as fast as it was.
Rising vacancy levels have not only made it harder for landlords to charge more, but after years of sharp increases some tenants are tapped out.
According to data from real estate firm RealPage, average asking rent for a vacant L.A. County apartment during the first quarter of 2022 was up 17% from the same period a year earlier.
But by the first three months of this year, rent growth had slowed, with prices rising 6% from 2022 levels.
A similar slowdown was seen in the Inland Empire, as well as Orange, Ventura and San Diego counties.
Data from Apartment List and CoStar indicate a more favorable environment for renters.
According to CoStar, average rent is still positive in all Southern California counties, but rising less than RealPage data show.
According to Apartment List, the median rent for a vacant unit has turned slightly negative in the Inland Empire, Orange County and Ventura County, dropping by less than 2% in April from the previous year.
In L.A. County, median rent was up just 0.21%.
Warnock says he expects rent across L.A. County to also turn negative in coming months, but he doesn’t expect rent there and elsewhere in Southern California to see a sustained, or meaningful drop, because too few rentals are being built.
“A 1% annual rent decrease is not going to bring much comfort to someone who is out there searching,” he said, particularly when Apartment List data show rent in L.A. County is 11% higher than the start of the pandemic and 33% higher in the Inland Empire.
What if I can’t afford the housing that is listed for rent?
That’s not uncommon in expensive Southern California.
One option you have is Section 8, a federal program run by local authorities. If you meet the income qualifications and receive one of the coveted vouchers, you can find housing with a private landlord on the open market and you’ll pay roughly a third of your income toward rent with the government paying the rest.
However, there aren’t enough vouchers for everyone who could qualify.
You can check with your local government to see whether it is accepting applications, but it may not be. The city of Los Angeles opened its wait list last fall for the first time in five years, but it is now closed.
Another option you have is to apply to apartments reserved specifically for people of lower incomes. This can be government-owned public housing or housing built by nonprofits.
At times, for-profit developers include a handful of low-income units in their new projects as a condition of the project’s approval.
You can find more information on how to apply for these various apartments and subsidies in the following guides from The Times.
If I don’t want to move, will my rent to go up?
Landlords say their costs to manage and maintain buildings have risen along with overall inflation, meaning unless they cut back on those expenses, they’ll need to raise rent if they want to keep earning the same amount.
At the same time, rising vacancies can be a threat to a property owner’s bottom line, and many landlords are likely to be “more amenable to doing what it takes to keep you there,” Warnock said.
Some landlords have different financial motivations, however.
For example, one popular investment strategy in the real estate industry is to purchase buildings that have rent well below the typical going rate, then increase rents rapidly to what is considered market.
According to RealPage, whose data cover mostly large complexes, the average renewal increase for L.A. County tenants was 5.5% in the first quarter of 2023, down from from nearly 8% in the second quarter of 2022.
Is there any law that limits how high my rent can increase?
In most cases, yes.
In California, landlords of non-income restricted units can charge whatever they can get for vacant units but usually face some sort of limit on rent increases for existing tenants.
If you live in an apartment building built more than 15 years ago, a state rent cap law limits your annual rent increase to no more than 5%, plus inflation, with a maximum of a 10% increase. Since inflation is so high, the current cap is set at that 10% level.
Some cities have stricter rules often referred to as rent control or rent stabilization.
In the city of Los Angeles, buildings built on or before Oct. 1. 1978 — and even some new buildings — fall under the city’s rent stabilization ordinance.
In the years before the pandemic, the law limited annual rent increases for existing tenants in those buildings to 3% or 4%.
Currently, city law prohibits any rent increases for existing tenants in rent stabilized buildings. The ban, passed in the early days of the pandemic, is scheduled to expire in 2024.
In most cases, if you live in a building built within the last 15 years, there are no legal limits to how much your rent can increase in both Los Angeles and statewide.
However, during declared states of emergencies — like during the recent storms — anti-price gouging rules come into effect and bar rent increases above 10%.
As of May 1, according the website for the Governor’s Office of Emergency Services, those anti-gouging rules currently apply only to Riverside, San Diego, Contra Costa and Yola counties. They are set to expire May 20.
More information on how to tell whether your building falls under some of these limits can be found here.
Are there any other tips I should know when looking for a new place?
Yes. Though vacancy is increasing, it is still tight and you may need to apply to multiple places before finding a home. With each landlord typically charging an application fee, those costs can add up.
If you want to limit fees, check to see whether the landlord does, or will, accept applications from companies like Zillow or RentSpree that allow you to apply to multiple properties for a flat rate
For more tips, check out The Times’ overall guide to renting in Southern California.
Librarian Miki Goral has lived in the massive Westside residential complex Barrington Plaza for more than three decades. She swims in the large heated pool nearly every day and, from her one-bedroom apartment on the 10th floor, she has a view of the ocean. The building is a 15-minute bus ride from her job at UCLA and it’s rent-controlled, allowing her to retain some certainty over housing costs even as rents in the neighborhood have skyrocketed.
Like many of the Plaza’s long-term tenants, Goral had planned to stay for many more years.
This month, she learned that she and each of the residents of the complex’s 577 occupied units were being evicted so that the owner could install fire sprinklers and other safety upgrades. Most were given four months to leave, though Goral and others who are at least 62 or disabled can take up to one year. But Goral can’t imagine leaving.
“I don’t want to move,” she said. “I’ve been here for 34 years. It’s my home.”
Three months after the end of pandemic-era protections limiting the ability of landlords to evict tenants,the owner of Barrington Plaza has initiated one of the largest mass evictions in L.A. in recent years, pushing hundreds of Westside tenants out of their homes at the same time that the city grapples with a housing crisis.
Landlord Douglas Emmett Inc. says the move is necessary to install the sprinklers and other safety equipment in a complex with a history of dangerous fires. It has invoked the Ellis Act, which allows landlords to evict rent-stabilized tenants to remove units from the rental market.
Some tenants are already in the process of leaving, facing a significant jump in rent and the potential cruel irony that their own evictions — hundreds of Barrington residents dumped into the market at once — might drive up prices even more.
But Goral and others believe the company is improperly applying the law and that it can make the safety upgrades without permanently displacing them. They say they will fight to stay.
“In a period where we’re dealing with homelessness throughout the city and county, it’s a major issue that this company would suddenly put almost 600 people on the housing market to compete for housing,” Goral said. “It’s not a sensible thing to do.”
Housing officials say the city has little discretion once a property owner says they are taking a property off the rental market under the Ellis Act but that they are working to help residents relocate. City rules require landlords to pay tenants relocation assistance, amounts that range from about $9,000 to about $23,000, depending on how long they have lived in the apartment, their age, income and other factors.
“The impact of this is profound,” said Greg Good, senior advisor on policy and external affairs for the Los Angeles Housing Department. “There’s no way around that. It’s 577 units, and it will create significant disruption.”
When it opened in 1962, Barrington Plaza was celebrated as the tallest residential complex west of Chicago and the biggest urban renewal project ever insured by the Federal Housing Administration. There were extensive gardens, a nine-hole putting green and a unique intercom system that allowed residents to dial two digits to call down for maids, sitters and caterers.
Over the decades, the apartments would change ownership multiple times and residentswould raise repeated safetyconcerns at the complex, which was exempted from laws requiring fire sprinklers because of when it was built.
On New Year’s Day in 1971, a Christmas tree caught fire, causing the building to be evacuated and the elevators to be removed from service for several days. In 2013, another fire injured several people, including a toddler, and displaced the residents of dozens of units. And in January 2020, another fire left a 19-year-old exchange student dead and several others injured. News stories featured images of a man clinging to the outside of the building several stories up as he tried to escape the blaze.
After that fire, eight floors in the complex’s tallest building were red-tagged, and they have remained vacant since.
Eric Rose, a public relations executive working for Douglas Emmett, said in written responses to questions that when the company submitted plans to rebuild the damaged floors, the city conditioned its approval on the installation of sprinklers and other safety equipment throughout Barrington Plaza’s three towers.
Those changes cannot be done without vacating the three towersat the same time, Rose said, because building systems are shared among them and “structural changes, including changes to ceilings and walls, need to be made in order to carry the weight of the sprinkler system.”
This month, the company notified the city that it would withdraw the complex from the rental market under the Ellis Act, a 1985 state law that allows landlords to evict tenants in rent-stabilized apartments if, for instance, they are taking the building off the rental market to convert the units to condos.
Under city rules, owners invoking the Ellis Act must seek “in good faith” to remove it “permanently from rental housing use.”
Tenants and advocates say they believe the long-term plan is to rent the apartments once again. Because of that, they say, the evictions would be an improper use of the law.
“They want to renovate it. And they clearly want to re-rent it, and that’s not what the Ellis Act is about,” said tenant rights advocate Larry Gross, of the Coalition for Economic Survival.
He said the company should have used the city’s Tenant Habitability Program, under which landlords doing major renovations can temporarily relocate residents to comparable units until the work is done.
Rose says the Tenant Habitability Program is typically used for renovations that last days or months, not years.
“At this time, the owners of Barrington Plaza are removing the units from the market and have options as to how those units will change, be rehabilitated through new life-safety measures or become something different,” Rose said.
He suggested that the apartments could eventually return to the rental market under rules laid out by the city.
Any rehabilitation of the complex will take years, he said, and “after that time, if the units were brought back onto the rental market, the owner would follow the obligations relative to former tenants as provided in those state and local rules.”
There are no plans to build new condominiums on the site, Rose said.
Residents have struggled to make sense of the lack of clarity about the building’s future.
Attorney Nima Farahani, who has conducted legal clinics and met with several of the Barrington tenants, said that under the Ellis Act, “if you really, in good faith, can’t be a landlord, you can stop being a landlord.”
But, he said, “you’ve got to go out of the rental business. End of story.”
Under the law, if within two years a landlord rents an apartment vacated under the Ellis Act, they can be liable to former tenants for damages.
But after that, the consequences are less severe. If they rent within five years of the evictions, they must offer tenants a right of return with the same rent that they were paying when they were evicted, plus certain approved increases.
If the company rents again between five and 10 years, it must offer a right of return but can charge a market rate rent.
Advocates say that after two years, most residents will have resettled and be unlikely to return.
Residents have formed a tenants association, and many are preparing for fight the eviction. Some see it as part of a larger effort to protect affordable housing in Los Angeles.
A majority of the building’s tenants — who include a mix of retirees, working-class and white-collar workers and students — moved into the building in recent years. But more than 100 residents have lived at the Plaza for five or more years, according to city records. The median length of residency among those long-term tenants was 12 years. Some have lived there since the 1960s.
But even among those who have moved in more recently, there are residents who don’t want to go. Many say they chose the building because it was rent-stabilized, and that finding something similar will be next to impossible.
Jacqui Fournier, 56, moved in to Barrington Plaza during the pandemic, in August 2020. She pays $1,595 for a studio on the 10th floor, a rate she believes was lower than it might have been under normal circumstances.
“We want to stay in our homes,” she said. “We cannot get, on the Westside, a comparable apartment at what we are paying now.”
The going rate for a studio apartment in the vicinity of Barrington Plaza is about $2,600, said Ryan Patap, senior director of market analytics with CoStar, which tracks real estate data.
The median rent paid by tenants at Barrington is $2,295, according to city data. That amount includes studios, one-bedroom and two-bedroom apartments.
Patap said it is possible that the large-scale evictions themselves could cause moderate rent increases in the surrounding neighborhood.
“This many renters probably would push up the rents. But to what extent, it’s hard to quantify,” he said.
At the same time, it’s likely that many tenants won’t be able to remain in the neighborhood at all, because they wont be able to afford it, he said.
Chuck Martinez, a driver for Uber Eats, moved into Barrington Plaza in 2021. He knew it was the right place when he learned it was rent stabilized.
“I thought, ‘I’m going to need this,’ ” he said. “Looking back, I was happy I made the decision because now we’re dealing with inflation. The price of everything has gone up.”
He pays $1,850 a month for his studio on the 12th floor. From the windows that wrap around the corner unit, he can see Griffith Observatory and the Getty Center on a clear day.
“It’s a million-dollar view for $1,850,” he said.
For the last couple of weeks, when he’s not working he’s been meeting with other tenants, lawyers and advocates, trying to figure out if there is a way for him and others to avoid leaving.
“I’m trying to save myself from losing my rent-stabilized apartment,” he said. “It’s the only way to try to keep something livable.”